UK public finances vulnerable with risks mounting, says OBR

The ONS has been beset by problems with its core economic statistics, particularly in its influential labour market survey.

At the start of this morning’s session, Hoare said he had received a significant amount of correspondence from ONS staff suggesting that last week’s criticism was on the money and that the parliamentary session had gone viral at the agency.

ONS staff had told him that “there were problems, still are problems … the organisation is not being run professionally”, Hoare said.

Prax Group’s logistics arm has been placed in administration after struggling to access fuel supplies from one of the UK’s five oil refineries, prompting more than 100 redundancies at the division.

Axis Logistics has gone into insolvency alongside the Lindsey oil refinery in North Lincolnshire and its parent company State Oil.

The logistics division was responsible for shifting fuel supplies from Lindsey to the petrol forecourts operated by Prax Group.

A City source told The Times that drivers working for Axis had been unable to access supplies from the Lindsey after it was placed in the hands of the Official Receiver last week. Axis revenue has therefore been under strain as workers face difficulties carrying out deliveries.

The Financial Conduct Authority has fined Monzo Bank £21 million for inadequate anti-financial crime controls between October 2018 and August 2020.

The regulator said Monzo also repeatedly breached a requirement preventing it from opening accounts for high-risk customers between August 2020 and June 2022.

Such was the inadequacy of its controls — including a lack of independent address verification — that it repeatedly allowed customers to provide what the FCA calls “obviously implausible” UK addresses when applying for an account, such as “Buckingham Palace” or “10 Downing Street” and even Monzo’s own business address.

“Monzo failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime,” the FCA said.

The OBR’s report also highlights the sheer scale of potential damage to the British economy from cyberattacks, noting that such incidents have continued to intensify with recent attacks on Marks & Spencer, HM Revenue & Customs and the Legal Aid Agency.

“We estimate that a cyberattack on critical national infrastructure has the potential to temporarily increase borrowing by 1.1 per cent of GDP,” the OBR said.

It added that the phishing attack on HMRC, which cost £47 million, demonstrates the potential for direct attacks on government finances.

Separately, the M&S chairman Archie Norman told MPs that the instigator of the cyberattack on the company was believed to be the criminal hackers known as DragonForce, the same group thought to have attacked the Co-op and Harrods in ransomware incidents.

The triple lock on state pension has cost around three times more than expected, the OBS said as it cautioned that the structure of the pensions system and its likely development over time gives rise to a set of longer-term fiscal pressures and risks.

The OBR said there was “a potentially significant increase in the direct fiscal cost of state pension spending over the coming decades due to the triple lock and an ageing population”.

The triple lock means the state pension increases each year by the highest of the following three measures: CPI inflation, average earnings growth, or 2.5 per cent. There have been call for it to be scrapped.

The watchdog said the triple lock is expected to have cost £15.5 billion annually by 2029-30.

The UK faces a “daunting” task of managing its spiralling public finances over the coming decades after a series of governments have failed to rein in rising debt, the Office for Budget Responsibility has warned.

In its latest fiscal risks report, the government’s fiscal watchdog said the public finances remained in a “relatively vulnerable position” after dealing with shocks like the pandemic, an energy crisis and a bond market panic caused by Liz Truss.

“Efforts to put the UK’s public finances on a more sustainable footing have met with only limited and temporary success in recent years,” the OBR said. It noted that the UK deficit, at 5.7 per cent of GDP is the third-highest among the 28 advanced economies, and the debt burden – at 94 per cent of GDP – is the sixth-highest in the developed world.

Consumer confidence declined in June with perceptions of business activity deteriorating, the latest data from YouGov and the Centre for Economics and Business Research (Cebr) showed.

While some measures, such as those focused on household finances, improved, worsening perceptions of business activity among workers dragged down scores for the overall index. Both business activity measures declined.

Sam Miley, head of forecasting at Cebr, said: “Consumer confidence remains on a rocky ride, falling for a fourth month so far this year . . . Recent declines have been driven by weaker perceptions of business activity, which come as little surprise given the economy has faced a barrage of headwinds.”

WeightWatchers has emerged from bankruptcy after cutting its debts and has pledged to combine weight-loss jabs with lifestyle changes to cope with the challenge of “quick fixes” for managing weight.

The company has appointed a new chief medical officer, Dr Kim Boyd, to lead the integration of emerging science into its wider lifestyle-based offering for members.

Dr Boyd said she planned to expand the company’s legacy by “combining the best tools of modern medicine, like GLP-1s, with science-backed lifestyle change and the power of community to deliver better outcomes”.

GLP-1s, the scientific term for weight-loss jabs, work by reducing food cravings.

The group filed for bankruptcy in the US in May to tackle debts of $1.15 billion. The court process enabled it to restructure its finances and write off debt.

The FTSE 100 was trading flat this morning as investors mull the impact of President Trump’s not-so-firm tariff deadline, with the index up just 5.9 points at 8,812.45.

The gambling group Entain is the biggest riser after Bank of America upgraded its rating on the stock due to the performance of its US business.

Base metal miners strengthened on hopes of trade deals and goldminers were lifted by a rise in the price of the precious metal. Hopes of an interest rate cut boosted housebuilders, while Marks & Spencer slipped after it dropped in the customer satisfaction rankings. Diageo, the spirits and Guinness maker, was lower on concerns about tariffs.

The competition regulator is investigating the supermarket sandwich maker Greencore’s £1.2 billion takeover deal for its rival Bakkavor. The companies are both major suppliers to Tesco, Marks & Spencer and Sainsbury’s.

The Competition and Markets Authority said it was looking at possible competition concerns about the takeover, which will create a food-to-go giant with about 30,000 staff.

John Lewis customer satisfaction has improved but Waitrose is struggling

ALAMY

John Lewis has overtaken Marks & Spencer to become the UK’s top-rated retailer for customer satisfaction, but its sister brand, Waitrose, has dramatically fallen down the rankings.

The department store chain scored 86.7 out of 100 in the latest UK Customer Satisfaction Index (UKCSI), securing third place overall across all sectors and the highest spot for any retailer.

Isabella Fish, Retail Editor, has a full story here.

The insulation and roofing supplier has named Pim Vervaat as its new chief executive and chairman designate.

Vervaat takes over the SIG chief executive role in October from Gavin Slark, who announced in May that he was leaving to join the building materials group Travis Perkins.

As part of the company’s succession planning, Vervaat is expected to become non-executive chairman around 18 months later, when Andrew Allner steps down. The company expects to identify Vervaat’s successor as chief in advance of this handover.

SIG shares have fallen more than 40 per cent over the past year.

The corporate restructuring specialist at Begbies Traynor says it “has started the new year confident of a further year of profit growth” as it reported full-year results.

Headline profit rose 7 per cent to £23.5 million in the 12 months to the end of April with revenue 12 per cent higher at £153.7 million. This should not come as a surprise following a comprehensive pre-close trading update in May.

The student property group Unite has reported that 85 per cent of rooms are now reserved for the 2025/26 academic year, down sharply from the 94 per cent reported this time last year.

Joe Lister, Unite chief executive, said: “Sales momentum has picked up in recent weeks, in line with our expectations for a later sales cycle, and we continue to target occupancy of at least 97 per cent.”

The former stock market darling has been hit by waning domestic and overseas demand for university accommodation and rising interest rates.

The shares have fallen 11 per cent over the past year and still trade at a 38 per cent discount to the £13 a share they topped before the Covid-19 pandemic.

Equity futures point to a down day for Europe, with the FTSE 100 expected to open 25 points lower after slipping 16 points on Monday as uncertainty around tariff negotiations continues to weigh on sentiment.

The dollar, one of the biggest casualties from the tariff turmoil, was weaker this morning after rising yesterday. The pound is up 0.2 per cent against the dollar at $1.3627.

For all the noise about tariffs, Trump so far has just two trade agreements, with Britain and Vietnam, and a trade truce with China. The EU is hopeful of reaching a trade deal by Wednesday after European Commission president Ursula von der Leyen and Trump had a “good exchange”.

The Nikkei 225 index rose this morning

EPA

Asian markets rose this morning after President Trump left time for negotiations on tariffs, saying his new August 1 deadline was “firm, but not 100 per cent firm”.

Despite Trump announcing 25 per cent tariffs on imports from Japan and South Korea, Tokyo’s Nikkei 225 was up 0.27 per cent and Seoul’s Kospi gained 1.7 per cent.

The countries are America’s second and third-largest trade partners in Asia. Japan said it would seek a deal as soon as possible, calling the higher tariff “extremely regrettable”. South Korea said it would press ahead with talks.

Stock markets in China, which has reached a trade framework with the US, rose. The SSE Composite gained 0.6 per cent and Hong Kong’s Hang Seng added 0.7 per cent.